Kishor Sharma

Factors determining India's export performance

Abstract Export growth in India has been much faster than GDP growth over the past few decades. Several factors appear to have contributed to this phenomenon including foreign direct investment (FDI). However, despite increasing inflows of FDI especially in recent years there has not been any attempt to assess its contribution to India’s export performance—one of the channels through which FDI influences growth. Using annual data for 1970–1998 this paper investigates the determinants of India’s export performance in a simultaneous equation framework. Results suggest that the real appreciation of the rupee adversely effects India’s export performance. Export supply is positively related to the domestic relative price of exports while the higher domestic demand reduces export supply. Foreign investment appears to have statistically no significant impact on export performance although its coefficient has a positive sign.

Determinants of Efficiency in Least Developed Countries: Further Evidence from Nepalese Manufacturing Firms

Using a translog stochastic production frontier and maximum likelihood econometric methods, we estimate and model the determinants of firm level efficiency in the Nepalese context. Our results are broadly in line with theoretical expectations. We find that large firms are more efficient and that a higher capital intensity leads to inefficiency. There is no statistical evidence to suggest that foreign participation leads to efficiency improvements. Also, we do not observe any link between export intensity and efficiency improvement. We find that higher protection leads to inefficiency. Overall, our results suggest that an outward looking industrial strategy, which relies on less intervention and permits the development of large-scale industries, is conducive to efficiency improvement in least developed countries (LDCs) like Nepal.

The Pattern and Determinants of Intra‐Industry Trade in Australian Manufacturing

This paper the presents pattern and determinants of intra-industry trade (IIT) in Australian manufacturing since the late 1970s. The results point to a sharp rise in IIT from the mid 1980s which appears to be linked with an outward-oriented policy. Industry level analysis indicates that industries which experienced a sharp fall in protection are the industries with the higher levels of IIT. These include textile, garments, rubber products, and machinery and equipment. An increasing trend in IIT suggests that the short-term adjustment costs associated with trade liberalisation are likely to be lower, and that liberalisation can proceed without huge short-term adjustment costs. Using a logit model the determinants of IIT are investigated. Results indicate that intra-industry trade is positively related to product differentiation and scale economies, and negatively related to the levels of protection and foreign ownership in the pre-liberalisation period. In the post-liberalisation period, however, it is scale economies that explain the inter-industry variations in IIT. R&D intensity and close economic integration appear to have no impact on IIT regardless of the nature of the policy regime.

Horizontal and vertical intra-industry trade in Australian manufacturing: does trade liberalization have any impact?

This paper contributes to the literature on intra-industry trade (IIT) by disentangling such trade into horizontally and vertically differentiated products, and investigating their determinants in the context of trade liberalization in Australia. IIT in Australian manufacturing has increased following trade liberalization in 1980s and is increasingly dominated by vertically differentiated products. Industry level evidence confirms that the failure to segregate IIT into horizontally and vertically differentiated products produces misleading results as their determinants differ. Also, structural changes brought about by the policy liberalization appear to have an impact on total as well vertical IIT.

Trends, Patterns and Determinants of Australian Foreign Direct Investment

The aim of this paper is to present empirical evidence of the determinants of Australian foreign direct investment using hypotheses drawn from an investment demand model, new trade theory and institutional economics. The findings suggest that countries which are open, have a large domestic market, and have a similar language and culture to Australias attract most of its foreign investment. There is also evidence to suggest that countries in regional blocs tend to attract Australian investment, possibly opening up opportunities for investors to capture a large regional market. Although difficult to prove statistically, the findings also suggest that countries that are economically more stable and have strong institutional credibility tend to attract Australian investment.

Trends, Patters and Determinants of Foreign Direct Investment in China

Foreign direct investment (FDI) has played a pivotal role in the transformation of the Chinese economy. It is the largest host of FDI among the developing world, attracting over one-third of total world investment. China’s success in attracting FDI appears to have been linked with its large domestic market, openness, quality of physical infrastructure and lower wage rates. While China remains an attractive location for foreign investors, our findings point to the need to remove the bias against private sector by privatizing state-owned enterprises to facilitate foreign investment.

Imperfect Competition, Returns To Scale and Productivity Growth In Australian Manufacturing: A Smooth Transition Approach To Trade Liberalisation

This Paper examines the relationship between trade liberalization and productivity growth for Australian manufacturing. An imperfect competition, non-CRS, smooth transition empirical framework is employed for analysis. GMM estimates of the logistic smooth transition model imply that trade reform impacts take approximately four years to complete, but do not occur over the same time period for all industries. In response to trade reforms, for most industries a significant improvement in productivity is estimated, these improvements are associated with lower mark-ups and falling scale parameters. A minority of industries however, experienced no change or falling productivity growth in response to reforms, these industries tended to have the highest absolute protection levels. [D24, F12, C52, L60]

Liberalization, export incentives, and trade intensity: new evidence from Nepalese manufacturing industries

Abstract This paper presents an empirical analysis of the consequences of liberalization and export incentives on trade intensity in Nepal, a “least developed” country with weak institutions and severe infrastructure bottlenecks. Industry level evidence provides no support for any link between protection and export performance, or that export intensity is determined primarily by relative factor abundance. Results suggest that lower protection and public sector dominance lead to higher import penetration, and that foreign investment increases import penetration when the policy regime is restrictive. Although some of these phenomena are due to specifically Nepalese factors, such as its open border with India, some general policy lessons for other least developed economies emerge.

Liberalization, growth and structural change: evidence from Nepalese manufacturing

This paper presents an empirical analysis of the consequences of liberalization on industrial structure in Nepal, a least developed country with weak institutions and severe infrastructure bottlenecks. Results suggest some structural change in manufacturing output and trade orientation which appears to be due to a change in incentive structure, but no significant improvements were recorded in total factor productivity growth which is of central importance for a least developed country like Nepal. Export intensity rose significantly in the postliberalization period despite poor productivity performance of export-oriented industries while import intensity fell due mainly to improved competitiveness in import competing industries and a fall in imports for smuggling to India.

Foreign Direct Investment in a Transition Economy: Lessons from the Experience of Mongolia:

This article presents an analysis of the trends and patterns of foreign direct investment (FDI) in Mongolia, a former centrally planned economy which embarked on economic reforms in 1990. Since then, there has been a dramatic increase in FDI inflow into the country. The volume of FDI rose from less than one per cent of GDP in 1991 to 80 per cent by 2010. These foreign-owned enterprises have made a significant contribution to the country’s export earnings, but their effects on employment-creation and hence poverty-reduction remains very small. This appears to be largely due to a heavy concentration of foreign firms in relatively capital-intensive mining sectors rather than labour-intensive light manufacturing. Further, there is evidence to support growing business confidence that Mongolia has a potential of FDI to become a major player in global commodity markets with its rich gold, copper, zinc, uranium, coal, molybdenum and oil reserves.